The FDBCA prohibits a debt buyer from filing suit or initiating arbitration or other legal proceedings to collect a consumer debt if the applicable statute of limitations on the debt buyer’s claim has expired. See, California Civil Code § 1788.56. When a debt buyer does file suit, the Act includes nine specific requirements that must be included in the allegations of the complaint, as follows:
(1) That the plaintiff is a debt buyer.
(2) The nature of the underlying debt and the consumer transaction or transactions from which it is derived, in a short and plain statement.
(3) That the debt buyer is the sole owner of the debt at issue, or has authority to assert the rights of all owners of the debt.
(4) The debt balance at charge off and an explanation of the amount, nature, and reason for all post-charge-off interest and fees, if any, imposed by the charge-off creditor or any subsequent purchasers of the debt. This paragraph shall not be deemed to require a specific itemization, but the explanation shall identify separately the charge-off balance, the total of any post-charge-off interest, and the total of any post-charge-off fees.
(5) The date of default or the date of the last payment.
(6) The name and an address of the charge-off creditor at the time of charge off, and the charge-off creditor’s account number associated with the debt. The charge-off creditor’s name and address shall be in sufficient form so as to reasonably identify the charge-off creditor.
(7) The name and last known address of the debtor as they appeared in the charge-off creditor’s records prior to the sale of the debt. If the debt was sold prior to January 1, 2014, the debtor’s name and last known address as they appeared in the debt owner’s records on December 31, 2013, shall be sufficient.
(8) The names and addresses of all persons or entities that purchased the debt after charge off, including the plaintiff debt buyer. The names and addresses shall be in sufficient form so as to reasonably identify each such purchaser.
(9) That the debt buyer has complied with Section 1788.52.
See, California Civil Code §1788.58(a). In addition, a copy of the contract or document described in section 1788.52(b) must be attached to the complaint. Id. at § 1788.58(b). The debt buyer must ensure, however, that it does not disclose with the complaint any “personal, financial, or medical information, the confidentiality of which is protected by any state or federal law.” Id., at § 1788.58 (c).
Defaults In Collection Litigation
The Act also governs the requirements for a debt buyer to obtain a default judgment. Specifically, it provides that no default may be entered for a debt buyer “unless business records, authenticated through a sworn declaration, are submitted by the debt buyer to the court to establish the facts required to be alleged …” and the debt buyer submits a copy of the contract or other document required by the Act, also authenticated through a sworn declaration. See, California Civil Code §§ 1788.60(a), (b). This is a big one, so make sure that you can actually authenticate the records you are using before you bring suit. If they are not your business records, you are going to need a declaration from someone (likely a predecessor) who can authenticate the records as their business records made in the regular course of their business.
Finally, under California Civil Code §1788.61 (a) (1), if service of a summons has not resulted in actual notice to a person in time to defend an action brought by a debt buyer and a default or default judgment has been entered against the person in the action (on or after January 1, 2010), the person may serve and file a notice of motion and motion to set aside the default or default judgment and for leave to defend the action within a reasonable time, but in no event exceeding the earlier of six (6) years after entry of the default or default judgment or 180 days of the first actual notice of the action. To make things more challenging, this section appears to conflict with CCP § 583.310, which provides that an action shall be dismissed by the court on its own motion or on motion of the defendant, if it is not brought to trial within five years after it is commenced.
Discuss your ability to recover under the FDBPA with experienced collection attorney Ronald P. Slates today.